The Janitor rule is an instrument used by the courts to overturn overly broad non-competition prohibitions. For example, a non-compete agreement that prevents a CEO from being employed by a competitor as a janitor, cook, pilot or any other role is not valid. As you can see, courts are reluctant to apply non-compete agreements in New York and will only do so if the real damages are clearly highlighted by the disclosure of trade secrets or by the rare fact of a truly unique or exceptional service of an employee. Today, some companies require low-skilled workers, such as sandwich makers and delivery drivers, to sign non-compete measures. As a result, the worker must leave his or her duties on a voluntary basis. The fact is, of course, that it must be the worker who makes a real choice between competing or receiving a benefit. In the event of the worker`s dismissal, the employer has effectively chosen the worker and any inability to compete that the employer intends to impose is subject to the usual adequacy test. A non-compete agreement can only be applied if your employer proves that you are competing. In the sections above, we have considered some of the most appropriate arguments to prevent leaders from imposing a non-compete agreement. These are (1) the absence of legitimate business interests, (2) the company has fired the executive, and (3) the Janitor rule. These arguments are often all you need to defend yourself against non-competition action.
But the following arguments can be very effective in some cases. New York will not impose a non-compete agreement on an executive who has been dismissed for no reason. Marsh USA, Inc. vs. Alliant Ins. Services, Inc. 26 N.Y.S.3d 725 (2015). If a company wants to prevent an employee from working for a competitor, it must be prepared to hire it. When they dismiss the person, the company can no longer enforce the non-competition agreement.
“The application of a competition rule if the worker was dismissed without cause would be unacceptable, as it would destroy the reciprocity of the undertaking on which the Confederation would not compete.” SIFCO Indus., Inc. v. Advanced Plating Techs, Inc., 867 F.Supp. 155, 158 (S.D.N.Y. 1994). Accordingly, the courts must assess the adequacy of the non-competition agreement taking into account the individual circumstances of the employer and the worker and balance the employer`s need for protection with the difficulties that result for the worker. Competition bans are controversial. Many states and cities are considering laws that restrict or prohibit the application of non-competition rules. New Hampshire and New York City are currently considering limiting the legislation. Vermont and Pennsylvania have broader proposals that would prohibit the use of all non-competition prohibitions. Courts use a two-part test to determine when a non-compete agreement serves an employer`s legitimate business interests.
In the context of the legitimate interest test, New York`s non-compete agreements are applicable only to the extent necessary to prevent the disclosure or use of trade secrets or confidential information, or (2) where the services of a staff member are exceptional.